ITC Vs Dabur: Which FMCG Stock Should You Bet On After Q2 Results?
India’s leading homegrown fast-moving consumer products (FMCG) giants ITC Ltd and Dabur India reported a steady performance despite headwinds during the July-Sept quarter for fiscal 2025-26 (Q2FY26). The FMCG majors have received fresh reviews and stock calls from domestic brokerages after the conclusion of the second quarter results.
Steady Performance Amidst Headwinds
While ITC reported a sustained growth in its core business verticals, Dabur India maintained a resilient performance across its geographical segments. On an average, the FMCG stocks have achieved ‘hold’ or ‘accumulate’ ratings from brokerages albeit slight trims on their respective target prices.
Key Trends in the FMCG Sector
India’s FMCG sector’s performance in the quarter ended September 2025 was shaped by various trends across segments. The two most prominent ones being the nationwide goods and services tax (GST) rate cuts and the consumer-led demand growth during the festive season. The Nifty FMCG index is flat-to-negative on a year-to-date (YTD) basis. However, it gained over 3% in three months during the quarter-under-review.
Reasons for the FMCG Index’s Underperformance
Two major reasons are causing pain for the FMCG index due to which it has not gained on a YTD basis. Firstly, Q2 results are subdued due to the GST rate rationalisation and the impact may spill over in Q3. Secondly, valuations are still on the premium side and volume recovery is doubtful. However, analysts believe the sector is poised for revival in the second half of FY26 and beyond.
Stock Performance: ITC Vs Dabur
During the July-Sept. period, shares of ITC were flat-to-positive while Dabur India shares gained 4% in the three-month period. Interestingly, the Nifty FMCG index gained 3.38% in the second quarter, whereas on a YTD basis, it remains flat. However, brokerages remain positive on both FMCG stocks despite external headwinds.
Five-Point Analysis for Investors
Here’s a five-point analysis for investors to decide which stock they should bet on after Q2FY26 results:
- ITC Ltd.’s Q2 Performance: ITC Ltd.’s net profit rose 2% to Rs 5,179.8 crore in the Sept. quarter on a standalone basis, while its topline saw a 3.4% yearly decline to Rs 18,021.25 crore. Earnings before interest, tax, depreciation and amortisation rose 2% YoY to Rs 6,252 crore while margin came in at 34.7%.
- Dabur India’s Q2 Performance: Dabur India’s bottom line rose 6% YoY to Rs 452.5 crore on a consolidated basis. The Ghaziabad-headquartered FMCG major’s revenue rose 5.4% to Rs 3,191.32 crore while Ebitda was 6% YoY to Rs 588.07 crore. Dabur India’s margin came in at 18.4% compared to 18.2% in the year-ago period.
- Segment-wise Performance: Both FMCG majors reported sustained growth across its segments in Q2. ITC Ltd’s cigarettes business grew 6.8% YoY and the FMCG segment rose 7% despite operational challenges. The paper business was up 5%. Similarly, Dabur India’s consumer care business grew 6%, while food business growth was flat. Toothpaste business reported 14. 3% growth and the 100% fruit juice portfolio under ‘Real Activ’ brand grew over 45%.
- Brokerage Views: Dabur India is expected to deliver high-single-digit revenue aided by mid-high single-digit volume growth, according to Dolat Capital. Analysts at Systematix Institutional Equities said Dabur India’s performance can gradually revive going forward, aided by sustained rural rebound with eventual urban recovery and distribution expansion.
- Target Prices and Ratings: For Dabur, Dolat Capital trimmed the target price from Rs 587 to Rs 556 and maintained an ‘accumulate’ rating with ‘buy on dips’, indicating a return potential of 10 to 20% in the next 12 months. Systematix has a ‘hold’ rating on Dabur India with a revised target price of Rs 550 from Rs 565. However, Nuvama Research has a ‘buy’ rating as La Nina or harsher winters may benefit Dabur’s winter portfolio—Chyawanprash, Honey, etc.
Conclusion
In conclusion, both ITC and Dabur India have reported a steady performance in Q2FY26 despite headwinds. While ITC’s cigarettes business grew 6.8% YoY, Dabur India’s consumer care business grew 6%. Brokerages remain positive on both FMCG stocks, with Dolat Capital maintaining an ‘accumulate’ rating on both stocks. However, investors should carefully analyze the five-point analysis and consider their individual financial goals and risk tolerance before making any investment decisions.
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